How Can I Develop a Credit and Collection Process with Limited Experience? Seeking Advice and Resources

Hi Gurus,

I just received an offer to develop the company's credit and collection process, but I have limited knowledge in this area and am not familiar with accounts receivable. Could any of you share your experiences or suggest any books that may help?

Thanks for your great help in advance.

Credit & Collections Process Overview

Please find attached the ebook.

Just a brief:

- The Credit & Collections process starts with the creation of an account.

- Once the account is created by the Data Maintenance Team, the credit analyst determines the credit limit of the customer and assesses if the customer is worthy enough to do business with. This is done by analyzing company reports from different credit rating agencies like D&B, Financials, Trade References, etc.

- Once the credit limit is established, the orders are entered into the system by the order entry team, which is approved by the credit controller.

- Then, the billing team invoices the customer.

- Once the invoice becomes due, the Credit & Collections team starts following up with the customer to receive payment against the overdue invoices.

- Once payments are received, they are applied against the invoices as per the remittance advice received from the customer.

- If there is any short payment received (customer pays less than what they have been invoiced), also known as deductions, the Credit & Collections team follows up with the customer's Accounts Payable and their own sales team to resolve the issues.

- At the end of every month, reconciliation is done to ensure that the ledgers match.

Hope the ebook and the above process flow will be helpful to you. 

Wishing you a happy new year!!!

Regards

Hi, the above information is very useful. You can add some tips like the Dunning Procedure, which many MNCs and branded companies, as well as banking organizations, are now following to collect credit in a polite manner. Credit collection depends on how well you keep track of their accounts. They have certain credit limits, and it is essential to ensure that the AR team follows those rules. Additionally, you need to prepare an aging report monthly and have an understanding of bad debt, which includes credits that fall under such debts.

Apart from this, check your SLAs (Service Level Agreements) and the agreements companies have made with them, etc. I hope this information is useful for you. If you want more, you are welcome to join our professional groups on pahechan.in. Have a good day.

Hello colleagues, please, has anyone done research on improving accounts receivable to enhance profitability in a company? I am an MBA student and do not have basics in accounting, so I really need professional advice from you gifted people. As fast as possible, my deadline is Tuesday, 12th April.

Kind regards,
lilybaby

I have read the book, thanks. However, I have a problem with developing research questions, objectives, and forming a questionnaire to improve accounts receivable and enhance productivity in a pharmaceutical company. Can anyone please assist me? I am not an accountant by profession.

Regards, Lilybaby

I have experience in Accounts Receivable in a BPO. We provide finance support to GM Motors in the Philippines. I don't know how useful it is, but based on my experience, having control over AR Inventory, checking all Credit Limits allowed to your company's customers, and preparing reports like Customer Aging where you will find credit limits and collection pending are crucial. Additionally, understanding the Dunning Procedure will be helpful for you. These are very important AR activities. If you have control over them, you will succeed in achieving your goals.

Thank you.